Question : RATE OF INTEREST ON LOANS

URBAN DEVELOPMENT AND POVERTY ALLEVATION
Pandey Shri Ravindra Kumar
09-12-2003

(a) whether the Housing and Urban Development Corporation (HUDCO) has modified and lowered the rate of interest on loans granted for various projects and also for personal housing recently;

(b) if so, the details thereof; and

(c) the existing criteria adopted by HUDCO for construction of houses and sanction of loans?

Answer given by the minister

MINISTER OF STATE (INDEPENDENT CHARGE) IN THE MINISTRY OF URBAN DEVELOPMENT AND POVERTY ALLEVIATION ( SHRI BANDARU DATTATRAYA )

(a): Yes, Sir. Housing & Urban Development Corporation Ltd. (HUDCO) has modified and lowered the rate of interest on loans granted for various projects and for loans to individuals for personal housing under HUDCO Niwas with effect from 19th November, 2003.

(b): Details of the revised norms applicable are given at Annexure.

(c): HUDCO is a financing institution and it finances various housing and urban development projects. The actual construction is undertaken by the borrowing agencies. The projects received in HUDCO for financing are appraised and sanctioned, if found technically sound, financially viable and legally acceptable to HUDCO.

ANNEXURE

ANNEXURE REFERRED TO IN REPLY TO PART (b) OF LOK SABHA USQ.NO. 1142 FOR 09.12.2003.

OPTION A - FLOATING RATE OF INTEREST

FINANCING PATTERN
-
A Base Rate (BR) 8.5% p.a.

(Base Rate will remain in force till further
revision is made)
-
B All housing and Infrastructure Extent of Net interest rate(%) p.a.
Project Loans including Take-out Finance Above Base Rate
Finance except HUDCO NIWAS -
Upto (%) Upto 5 Upto 10 Upto 15
years years years

1. EWS Housing & Action Plan Scheme As per 0.50 lower than BR
by Public Agencies/NGOs guidelines
2. Direct borrowing by Govt. and 100 BR BR BR
Police Organisation
3. Public Government Agencies 85 BR 0.25 0.50
4. Private Agencies/Co-operative
Agencies 70 1.00 1.50 2.00

Notes: Normally Base Rate shall be revised once in a year. However, in the event of change in the interest rate of at least 1%, the revision in base rate can be twice every year.

OPTION B - FIXED RATE OF INTEREST @

FINANCING PATTERN

A All housing and Infrastructure Extent of Net interest rate (%) p.a.
Projects Loans including Take finance
Out Finance except HUDCO NIWAS
` Upto (%) upto 5 Upto 10 Upto 15
years Years Years
-

1. EWS housing & Action Plan As per 8.50 8.50 8.50
Schemes by Public Agencies/NGOs guidelines
2. Direct borrowing by Govt. and 100 9.00 9.00 9.00
Police Organisation
3. Public Government Agencies 85 9.00 9.25 9.50
4. Private Agencies/co-operative 70 10.00 10.50 11.00
Agencies
-
Notes:

@ HUDCO will have the option to revise interest on all schemes (including existing schemes) at an interval of 5 years. However, in respect of loans where resetting in interest rate has already been approved, the period of five years shall be from the date of resetting.

Sub. Revision in interest rate for loans to Resident Indian and Non-resident Indian under Fixed and floating rate scheme, bulk Loan Schemes, fees for loans to Resident Indians and other operational norms of HUDCO NIWAS - HN-OM-08-2003

I. INTEREST RATES:-

A. Loans to Resident Indians under Fixed Rate Scheme:- (Effective 18.11.2003)

Purpose of Loan Existing ROI Revised ROI+
- For construction
- Purchase
- Composite loan 9.50/975/10.00% 8.25/8.50/8.75%
- Purchase of Plot
- Extension/Improvement
- Registration of Existing
House.
Loan to Professional for 11.00% 9.75%
non residential premises (upto 10 (upto 10 years)
years)
Loan Against Residential 11.00% 9.75%
Property (upto 5 (upto 10 years)
years)

1. + First Figure is for 1-5 years, second figure is for 6-15 years and third figure is for 16-25 years.

2. Existing benefit of reduction in interest rates for certain categories of individuals under empowering mechanism would stand withdrawn.

B.LOANS TO RESIDENT INDIANS UNDER FLOATING RATE SCHEME:- (EFFECTIVE 18.11.2003 TO 31.03.2004)

Purpose of Loan Existing ROI Revised ROI+
- For construction
- Purchase
- Composite loan
- Purchase of Plot 9.50% 8.25%
- Extension/Improvement (upto 25 years)
- Registration of exis-
ting House

C. LOANS TO NON-RESIDENT INDIANS FIXED RATE SCHEME:-
(EFFECTIVE 18.11.2003)
Purpose of Loan Existing ROI Revised ROI+
- Construction
- Purchase
- Composite Loan 9.75/10.00% 8.50/8.75%
- Purchase of Plot
- Extension/Improvement
+ First Figure is for 1-5 years and second figure is for
6-10 years.
D. LOANS TO NON-RESIDENT INDIANS UNDER FLOATING RATE SCHEME:-

(Effective from 18.11.2003 to 31.3.2004)
Porpose of Loan Existing ROI Revised ROI+
- Construction
- Purchase
- Composite Loan 9.50% 8.25%
- Purchase of Plot (upto 25 years) (upto 10 years)
- Extension/Improvement

+ Revised rates will be applicable to new loans sanctioned after revision including loans sanctioned earlier but where agreement has not been executed before 18.11.2003. However, six monthly adjustments in interest rates in respect of existing as well as new loans will be made effective from 01.4.2004 for which new rates shall be notified in March 2004.

E. BULK LOANS SCHEME (FIXED RATE OF INTEREST):- (EFFECTIVE 18.11.2003)

(a) Bulk Loans Scheme for State Govts/Para-Statals of the State Govts./Profit making PSUs:

-
Esisting ROI Revised ROI+ Repayment period

(Years)
-

9.50% 8.25% Upto 5

9.75% 8.50% 6 to 10
10.00% 8.75% 11 to 15
-

+ Existing benefit of reduction in interest rates under empowering mechanism would stand withdwawn. However, processing and administrative fee under empowering mechanism would be 0.15% for Bulk Loan to State Govts./Para-Statals of the State Govts./Profit Making PSUs.

(b) Bulk Loan scheme for other HFCs which has rating not less than `AA`:

Existing ROI Existing ROI Revised ROI Revised ROI Repayment

(for`AA` (for `AAA` (for `AA` (for `AAA` period
Rated Rated Rated Rated (Years)
company) company) company) company)
10.00% 9.75% 8.75% 8.50% upto 5
10.25% 10.00% 9.00% 8.75% 6 to 10
10.50% 10.25% 9.25% 9.00% 11 to 15
Note: HUDCO shall not extend Bulk loan to any HFI, which has rating
less than `AA` 
PROCESSING AND ADMINISTRATIVE FEE (EFFECTIVE 18.11.03) FOR RESIDENT
INDIAN LOANS:-
Existing Terms Revised terms+
-
Individual 0.6% (0.2% Processing There shall be no Proce-
Loan for Fee(PF) and 0.4% ssing fee for resident
Resident Administrative fee Indian Loans. Administra-
Indians (AF) tive fee shall be 0.50% of
the loan amount sanctioned
for Resident Indians.
Individual 0.4% (0.2% PF & 0.2% AF) Administrative fee shall
Loan for for Personnel from armed be 0.3% of the loan amount
resident forces including para- amount sanctioned for personnel
Indians military forces and police, from armed foreces including
widows, physically handi- paramilitary forces and
capped, artists, journa- police, widows, physically
lists,women and employees handicapped artists, journa-
of Central/State Govt./ lists, women and employees
PSUs. of central/State Govt./
PSUs.

+ Administrative fee for individual loans to Resident Indians under empowering mechanism would be 0.30% for cetain categories. The group of allottees/employees entitled for benefit under empowering mechanism for administrative fee would stand reduced from present level of 20 indivisuals to 10 individuals.

Processing & Administrative fee for NRI`s, Bulk Loan to State Govts./Para-Statals of the State Govts./Profit making PSUs and Bulk Loan to other HFCs will remain same i.e. 1.25%, 0.25% and 0.40% respectively.

All other terms and conditions of lending will remain same except as indicated above. These revised interest rates will be applicable in respect of loans sanctioned on or after 18.11.2003 including loans sanctioned in the past but where the agreements have not been executed upto 17.11.2003. You are requested to make necessary additions/amendments in Annexure-B-I-A (page 359), annexure G-II,G-II-A (page 167 & 173), item 1.1(b) (page 11), item 1.6 (page 14 & 15), item 1.10 (page 18), item 1.16 (page 23), item 1.17 (page 25), item 10.5&10.6 (page 154,15 & 156), annexuren-V (page 411) of the Handbook on Procedural Guidelines and Operational Manual of HUDCO NIWAS and other required changes. In respect of loans of floating interest rates, the rates quoted above are applicable from 18.11.2003 till 31st March 2004 on loans sanctioned on or after 18.11.2003 including loans sanctioned in the past but where the agreements have not been executed upto 17.11.2003.

These rates are not applicable for loans already disbursed and where agreements have been executed before 18.11.2003.

Question : RATE OF INTEREST ON LOANS

Answer given by the minister

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